Govt of China wants investment treaty, more industrial parks in India

The government of China has told Delhi it wants more industrial parks allocated for Chinese firms, as well as expeditious discussion on an investment treaty.

These were discussed during a meet between Commerce and Industry Minister Suresh Prabhu and Chinese counterpart Zhong Shan earlier this week in New Delhi, a senior government official said. The bilateral engagement was under the aegis of the India-China Joint Group on Economic Relations, Trade, Science, and Technology, after three years.

From 2016 onward, the government of India had terminated the Bilateral Investment Treaty (BIT) it had earlier entered into with various countries, including China. The government now maintains that all future investment pacts will be negotiated under the framework of the model BIT issued by the government in 2015. The one with China had come into force in 1996.

"We have told the Chinese government to get in touch with the department of economic affairs under the finance ministry which handles such matters." a senior official said on Wednesday. Adding that restarting of a BIT discussion with China might not rank high on India's priorities.

"Even having a BIT did not really help us earlier with regard to China and wherever Chinese firms have seen opportunity, they have invested anyway," a Delhi-based policy expert said.

Cumulative direct investment from China stood at $1.7 billion Rs 110 bn) till December 2017, according to official figures. This is less than the nearly $2.6 bn of investment from Spain or South Korea.

India is currently negotiating investment pacts with nations were earlier pacts had lapsed. Notably, a proposed Bilateral Trade and Investment Agreement with the European Union. The prime concern raised by other nations on the BIT is with the clause stipulating that in the event of an investor-state dispute, a foreign investor may only seek the option of international arbitration when all domestic legal routes have been exhausted. While India feels this is required to keep control on litigation and reduce the chances of extremely high penalties from international tribunals, richer nations have called the Indian legal system slow and corrupt.

India has also tried to push information technology services exports to China. In December 2017, the National Association of Software and Services Companies (Nasscom) and the Municipal People's Government in Dalina, China, signed a deal to launch a collaborative platform, to promote cooperation between Indian & Chinese firms on the internet of things and artificial intelligence. "We are hopeful that this will help Indian firms gain a foothold in mainland China and work towards building industry relations with companies based over there," a Nasscom official said.